Explanation Given information: An investment with principal $ 5 , 000 is made at 10 % compounded semiannually. Formula used: Compounding period can be defined as the duration or length of time from one interest payment to the next. If an investment made for 4 years at 6 % compounded annually (once per year) then it would have four compounding period which can be calculated by formula given below: Compounding periods = Term of investments ( years ) × m Here, m is the period per year. The interest rate per period can be calculated by dividing the annual, or nominal, rate by the number of periods per year, Interest rate per period = Nominal rate Period per year The compound amount (Future value) can be calculated by the formula given below: Compound amount = Table factor × Principal In table 11-1, the table factor is the intersection of the rate-per-period column and the number-of-periods row is the future value of $ 1 at compound interest. The compound interest can be calculated by the formula given below: Compound interest = Compound amount − Principal The annual percentage yield (APY) can be calculated by the formula given below: A P Y = Total compound interest earned in 1 year Principal Calculation: Consider the statement as “An investment with principal $ 5 , 000 is made at 10 % compounded semiannually” and solve as below: Sin

Contemporary Mathematics for Business & Consumers

8th Edition

ISBN: 9781305585447

Author: Robert Brechner, Geroge Bergeman

Publisher: Cengage Learning

See similar textbooks

Concept explainers

Unitary Method

The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.

Speed, Time, and Distance

Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 …

Profit and Loss

The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.

Units and Measurements

Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experime…

Videos

Question

Chapter 11.I, Problem 24RE

To determine

To calculate: The compound interest earned in 1 year and the annual percentage yield (APY) for the investment with principal $5,000 is made at 10% compounded semiannually.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 11.I, Problem 23RE

Chapter 11.I, Problem 25RE

Students have asked these similar questions

Explain how to solve all solutions of y"(x)+ay'(x)+by(x)=0 when the Characteristic Equation λ2+aλ+b=0 of the second-order linear differential equation y"(x)+ay'(x)+by(x)=0 has no real roots. Please distinguish between the two methods of "using real numbers to solve the space base" and "using complex numbers to solve the space base" and explain the key points respectively.

Use the circle to find exact value of each trigonometric function (number 16)

Use the circle to find exact value of each trigonometric function (number 22)

Chapter 11 Solutions

Contemporary Mathematics for Business & Consumers

Ch. 11.I - Gail Parker invested $10,000 at 6% interest...Ch. 11.I - Jenny Chao invested $20,000 at 6% interest...Ch. 11.I - Prob. 3TIE Ch. 11.I - Jill Quinn invested $7,000 in a certificate of...Ch. 11.I - Prob. 5TIE Ch. 11.I - Prob. 1RE Ch. 11.I - For the following investments, find the total...Ch. 11.I - For the following investments, find the total...Ch. 11.I - Prob. 4RE Ch. 11.I - Prob. 5RE

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, subject and related others by exploring similar questions and additional content below.

The compound interest earned in 1 year and the annual percentage yield (APY) for the investment with principal $ 5 , 000 is made at 10 % compounded semiannually.

Solution Summary: The author calculates the compound interest earned in 1 year and the annual percentage yield (APY) for the investment with principal 5,000.

Concept explainers

Videos

To calculate: The compound interest earned in 1 year and the annual percentage yield (APY) for the investment with principal $5,000 is made at 10% compounded semiannually.

Want to see the full answer?

Chapter 11 Solutions